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Morgan Stanley to Reduce Swiss Footprint

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Moving ahead with its strategy to shed non-core operations and improve efficiency, Morgan Stanley (MS - Analyst Report) is contemplating the divestiture or closure of its Swiss private banking unit – Bank Morgan Stanley AG. The discussion of the same was first revealed by Swiss financial news site http://www.finews.ch.

Morgan Stanley’s Swiss banking unit managed assets worth nearly $11.3 billion (CHF 10 billion) as of Dec 31, 2013. Further, the division employs around 130 people in Zurich and Geneva. Notably, the announcement for divestiture could come as early as the second quarter of 2014.

Morgan Stanley has been reviewing and realigning its business strategy to focus mainly on wealth management operations. Further, with the completion of its remaining stake buy in Morgan Stanley Wealth Management (MSWM) from Citigroup Inc. (C - Analyst Report), the company’s dependence on volatile trading revenues has considerably reduced.

Additionally, in Europe and Asia, Morgan Stanley has decided to streamline its footprint, defer expansion plans and exit certain parts of its businesses. All these are expected to drive earnings growth in the future.

Of late, Morgan Stanley is in the process of selling non-core/unprofitable units. In Dec 2013, the company announced the sale of Global Oil Merchanting Unit to a Russia-based Rosneft Oil Company. Further, the company is exploring strategic options for the sale of its stake in Transmontaigne Partners L.P. (TLP - Snapshot Report).

Additionally earlier that year, Morgan Stanley divested its wealth management divisions in Europe, the Middle East and Africa region to Credit Suisse Group AG (CS - Snapshot Report). However, the Swiss private banking unit was not the part of the deal at that time.

We believe that Morgan Stanley’s initiatives to vend non-core operations will aid in enhancing profitability.

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